Which of the following statements about reciprocal service department costs is correct?
A) They are allocated to producing departments under the direct method but not allocated to producing departments at all under the step-down method.
B) They are allocated to producing departments under the step-down method but not allocated to producing departments at all under the direct method.
C) They are not allocated to producing departments under either the direct or the step-down methods.
D) They are allocated to producing departments under both the direct and step-down methods.

Question

Quizplus · Accepted Answer

Reciprocal service department costs are allocated to producing departments under both the direct and step-down methods. The difference lies in the sequence of allocation, with the step-down method considering the costs of service departments that have already allocated costs to other service departments before allocating them to producing departments.

Which of the Following Statements About Reciprocal Service Department Costs